the staff of the Ridgewood blog
Berlin, Germany, the German energy giant Siemens Energy scrapped its profit guidance in late June, citing a “substantial increase in failure rates of wind turbine components” at its wind division Siemens Gamesa. Leaving a major loss of confidence by investors in the group’s ability to fix its struggling wind turbine division. Siemens Energy stock plunged by around 37% on June 23, while other wind companies also saw shares retreat as investors worried that the problems at Gamesa might be a symptom of a wider issue for the industry.
Siemens Energy CEO Christian Bruch told journalists on a call Friday that “too much had been swept under the carpet” at Siemens Gamesa and that the quality issues were “more severe than [he] thought possible.” Evgenia Golysheva, vice president of strategy and marketing at ONYX Insight, told CNBC. Industry body WindEurope denied that industry-wide technical failures could be on the horizon, insisting that “the problems at Siemens Gamesa are limited to Siemens Gamesa.”
Nicholas Green, head of EU capital goods and industrial technology at AllianceBernstein, told CNBC that the pace of expansion, and the fact that many components of larger turbines haven’t actually been in use for very long, means there could be inherent risks throughout the sector. “We have to acknowledge that putting brand new machinery — whether it’s on-shore or even more difficult off-shore wind farms — and the pace of change in that machinery has put us into slightly uncharted territory,” he said.
“Although it’s hard to tell at the moment, my best guess is that this probably actually is an industry-wide issue. It wasn’t that Siemens Gamesa is a bad operator as such, it’s that actually some of the normal protocols and time in use, operational data in use, is relatively limited.”
Siemens Gamesa’s board is conducting an “extended technical review” into the issue, which is expected to incur costs in excess of 1 billion euros ($1.09 billion). The company’s shares have recouped some losses, but remain down over 33% in the last month.
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